On Fri, 26 Apr 1996, Duncan K Foley wrote:
> > What I mean is that the state has, in the absence of a gold
> > standard, no obligation to redeem its money. In what sense
> > then is the money state debt?
>
> First of all, in an accounting sense. But the state also has to redeem
> the money when it is offered in payment of someone's tax liability.
Is the second point not also "in an accounting sense"? My tax liability
represents a debt owed to the state; it is extinguished by my handing
over money, i.e. by the cancellation of a debt owed me by the state --
from an accounting point of view. But this doesn't represent a true
constraint on the issue of state money, since if the state issues more
money, and if this ends up reducing the exchange-value of money, my tax
liability is simply adjusted upward accordingly.
Allin Cottrell